The Year Of The Digital Supply Chain

Manufacturing
I am the Managing Director of the Digital Supply Chain Institute.

The Colgate Connect E1 Smart ToothbrushColgate

The year we are about to leave behind has been a banner time for supply chains and many companies have made substantial progress toward implementing a truly Digital Supply Chain that lowers cost and increases revenue.

The introduction in 2018 of new technologies, new business models and new people with the right digital skills, will play out in years to come and dramatically change the status quo across all industry sectors. Of course, it is not all happy news and I list below our view of the top supply chain ideas (good and bad) that emerged in 2018. (In my next column I will offer what I believe will be the key supply chain trends in 2019.)

Algorithms are the heart and brains of the Digital Supply Chain. Market-leading companies figured out that the recipe for success is developing algorithms that predict and manage the business. Algorithms, formulas that rely on real data to draw conclusions and take action, were developed by these top companies and Artificial Intelligence/Machine Learning (AI/ML) technology is being applied to make them smarter every day.

Under Armour, for example, made big progress using its Connected Fitness data (gathered from smart shoes and other sources) to create algorithms that provide better performance for its customers, and better business results for Under Armour.

Blockchain is the answer to all Digital Supply Chain problems. Actually no! Blockchain pilots have been conducted in supply chains around the world, yet almost none of them had a strong enough business case to justify scaling up the technology. The problem: Too many companies focus on proving the technology works rather than assessing the value that Blockchain can bring to their enterprise.

Aricent, however, avoided that trap and applied Blockchain to its Dev Ops process. The global design and engineering firm experienced double-digit improvements in cost, quality and cycle time. They are rolling Blockchain out as you read this!

To help companies assess the business value of Blockchain, the Digital Supply Chain Institute (DSCI) developed the Blockchain Fitness Index, a step-by-step guide for supply chain managers to use to target the operations where Blockchain will be effective and what return to expect.

Digital Supply Chains drive revenue growth. This has been a good news/bad situation. Good because many companies focused on creating a customer-centric supply chain and made major improvements toward that goal. Bad because most of these companies did not drive (or track) revenue growth from supply chain actions.

A company that did a good job of driving revenue in this area is Colgate-Palmolive. They introduced a Wifi-connected toothbrush. The toothbrush collects information on the use of the brush and oral care. The information, available through an app, helps you do a better job of brushing your teeth, getting the right coverage and improving oral health. All of that also lines up with creating more revenue, not just from toothbrush sales, but also of toothpaste!

Change is not impossible, it just feels that way. Companies around the world reported that their progress toward a Digital Supply Chain was slower than they expected, and, of course, slower than they would like. Companies found that the workforce (and management) did not have adequate skills to operate in a digital environment. They found that organizational silos prevented an efficient way to gather data, generate algorithms, come to the best conclusions.

Companies that are “digital natives” (e.g., Uber) don't have these challenges. Traditional companies went to great lengths to collect data and work differently. For example, Corning has made remarkable progress defining its Digital Supply Chain vision and outlining the steps needed to move forward.

To help speed the transformation to a Digital Supply Chain, we developed a rapid change program, Catalyst, which is based on clear goals, measurement, and quick improvements.

A talent shortage is a problem. The No. 1 issue for companies that are trying to implement a Digital Supply Chain is finding the right talent. This is true globally and across all industries. More data scientists are needed, but few companies are confident that they can attract, deploy and retain them. Existing training programs do not identify the Digital Supply Chain imperatives and people are not learning new skills. The need for more customer knowledge is frequently missing. What’s more, acquiring, cleaning and using data is frequently a weak skill.

To address the talent shortage, DSCI developed a five-week online training program—Leading the Digital Supply Chain--that can be customized to accommodate specific company goals. Total training time is 30 minutes per day. Reasonable

In 2018, companies made impressive progress against the goal of implementing a Digital Supply Chain that delivers huge, game-changing benefit. But most companies want to move faster. In the new year, I will offer predictions for trends that will help supply chain leaders do just that in 2019. Hint: The key will be discovering new ways to collaborate by bringing together real-time data and skilled people that are not part of a traditional supply chain organization.

I have worked with top companies around the world on transforming their supply chains. We are a not-for-profit and are not selling software, hardware or trying to maximize consulting fees. I was the global chief transformation officer for Sony, I ran the IBM semiconductor b...